[Bridging_the_digital_divide] TiVo to use Internet at TV

Wed Jun 9 00:48:34 EDT 2004

New Service by TiVo Will Build Bridges From Internet to the TV
By JOHN MARKOFF
June 9, 2004

The Internet, in jumping past the personal computer and into the living  
room television set, is starting to give viewers the possibility of  
bypassing traditional cable and satellite services.

TiVo, the maker of a popular digital video recorder, plans to announce  
a new set of Internet-based services today that will further blur the  
line between programming delivered over traditional cable and satellite  
channels and content from the Internet. It is just one of a growing  
group of large and small companies that are looking at high-speed  
Internet to deliver video content to the living room.

The new TiVo technology, which will become a standard feature in its  
video recorders, will allow users to download movies and music from the  
Internet to the hard drive on their video recorder. Although the  
current TiVo service allows users to watch broadcast, cable or  
satellite programs at any time, the new technology will make it  
possible for them to mix content from the Internet with those programs.

"This is the fourth electronic video service, and it is an alternative  
to cable, satellite and broadcast television," said Tom Wolzien, an  
analyst at Bernstein Investment Research and Management. Those  
traditional services, Mr. Wolzien said, "have been the monster  
gatekeepers, but this is a way for content providers to get past them."

In the new world of Internet-connected television, viewers will not  
have to worry about when a show is scheduled or from where it comes.

"We're fully committed to developing an entertainment experience you  
can't get over normal broadcast television," said Michael Ramsay,  
chairman and chief executive of TiVo. "This is what we think the future  
of television is."

A timetable for introducing the video service has not been set, nor has  
its price.

TiVo sustained a big blow Tuesday when DirecTV, the satellite  
television provider and the biggest source of new subscribers for the  
TiVo service, said it had sold its entire equity stake of 3.4 million  
shares in TiVo. Shares of TiVo dropped more than 14 percent to close at  
$6.41.

There is some speculation in the industry that DirecTV is moving toward  
developing its own digital video recorder. Several analysts suggested  
TiVo is moving toward Internet downloading as a way to insulate itself  
against potential competition from DirecTV.

Last year TiVo, which has 1.6 million subscribers who use its digital  
video recorder with cable or DirecTV, acquired Strangeberry, a small  
Silicon Valley start-up that had developed a new technology to view  
Internet video streams. TiVo is now developing that technology and  
plans to integrate it into the TiVo system next year. Video  
distributors like Netflix, RealNetworks and Blockbuster are also  
starting to explore the possibility of delivering feature-length movies  
via the Internet to users for viewing later.

"We're no longer in a world where innovation is stopped because  
somebody is the only game in town," said Rob Glaser, chief executive of  
RealNetworks, a Seattle-based company that now streams audio and video  
to computer users through the Internet.

The idea of downloading and storing video for conventional television  
viewing has until now been pioneered by a small group of technology  
companies like Akimbo, a maker of an Internet digital video recorder  
that is based in San Mateo, Calif.

Because most Internet connections do not yet reliably support data  
speeds needed to view television-quality video as it is streamed, a  
number of the Internet video services require that programs first be  
downloaded and stored on a hard drive before viewing.

Now, as broadband Internet becomes widely available in homes and new  
wireless video networks make it simpler to move video data and streams  
inside the home, bigger players are starting to emerge.

For example, Microsoft demonstrated a service called IPTV at the  
Consumer Electronic Show in Las Vegas this year. The company believes  
that it is possible to deliver television to rival today's cable  
programming by using commonly available standard telephone lines, as  
part of what are called digital subscriber line, or D.S.L., services.  
It is running two small trials of the technology in Canada and  
Switzerland, and sees a broad potential.

"We sort of expect that TV will shift to where everyone will watch what  
they want when they want," said Peter T. Barrett, chief technology  
officer for Microsoft TV.

Microsoft executives argue that the technology would be a boon to  
telephone companies who are now searching for new revenue streams in  
the face of increasing pressure on their traditional voice-calling  
businesses. "Every single phone company has to be thinking about  
video," said Lynne Elander, general manager of marketing for Microsoft  
TV.

But executives at telephone companies said they were not moving quickly  
to deploy the Microsoft technology.

Both Verizon and SBC are engaged in trials and deployment of fiber  
optic networks, which offer significantly higher speeds than existing  
D.S.L. services. "The jury is still out on IPTV, we have to see how it  
works," said Eric Rabe, a spokesman for Verizon.

Smaller firms, however, are not waiting for competition to grow in this  
field. On Monday, Broadband Networks Inc., a start-up based in Los  
Gatos, Calif., introduced a service it called TimeshiftTV. The new  
service, using a $299 digital video recorder, will initially focus on  
offering video programs in eight foreign languages when it is available  
in December.

Broadband's chief executive, Bob Burke, said the company would try to  
license its technology to other companies.

The main challenge facing Internet video distribution is that streaming  
DVD and HDTV-quality video will require data rates above 5 megabits a  
second. That is far beyond most D.S.L. network speeds today, which  
generally range from 300 kilobits to 1.5 megabits.

Indeed, even downloading and storing high-definition video for later  
viewing at most D.S.L. speeds may not be economical. Sending the data  
stored on a DVD disk over the Internet at those speeds might take  
several days, making it a poor competitor for "sneaker-net" services  
like Blockbuster, which require the viewer to walk or drive to the  
store.

But for standard video quality, the economics may already work,  
according to a recent Bernstein Research report. It costs just 15 cents  
an hour to stream standard video across a D.S.L. connection, Mr.  
Wolzien said, and those costs are falling.

Whether Internet delivery of programming will be a serious threat in  
the near future to traditional broadcasters remains a matter for debate  
among industry executives. In any event, they also expect to capitalize  
on the new technology. As Steve Burke, president of Comcast Cable, the  
nation's largest cable operator, said recently in a phone interview,  
"We're big believers that the Internet is the future."

http://www.nytimes.com/2004/06/09/technology/09net.html? 
ei=5062&en=f02ffac2c4b10abd&ex=10873....

---

Jason Barkeloo
President
TouchSmart Publishing
http://www.touchsmart.net
tele 513.225.8765

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